Services Activity Surges In April To 13-Year High, Led By Finance And Insurance: Survey

According to a private survey by S&P Global, the services sector in India grew at its fastest rate in almost 13 years in April 2023.

The Purchasing Managers' Index (PMI) rose to 62, its highest level since June 2010, from 57.8 in March. A print above 50 indicates expansion while below 50 suggests contraction.

Since August 2021, the headline figure has remained above 50, indicating expansion, for 22 consecutive months.

The survey linked the growth to increased demand and favorable market conditions, with the Finance and Insurance sub-sector showing the strongest increase in output.

Additionally, the companies monitored by the survey reported an improvement in international demand for Indian services, with new export business expanding at the fastest pace in three months.

As per the survey, food, fuel, medicine, transportation, and wages were identified as the primary sources of inflation, while consumer services witnessed the most significant increase in average expenses.

“The combination of rising input costs and demand resilience urged services companies to lift their selling prices in April. The rate of charge inflation was marked and the strongest in 2023 so far.

"Granular data showed the most acute increase in selling prices among Transport, Information and Communication firms,” it said, reports Business Standard.

Pollyanna De Lima, associate director at S&P Global Market Intelligence, said: "Having retreated in each month since the start of the current calendar year, input price inflation quickened in April. PMI survey participants indicated higher salaries and wages awarded to staff, as well as pressures from food, fuel and transportation costs.

"Accommodative demand conditions facilitated the pass-through of additional expenses to clients, with prices charged for the provision of services increasing at the strongest rate in 2023 so far.”

"One area of weakness highlighted in the latest results was the labour market. Despite the substantial pick-up in sales growth and improved business sentiment towards the outlook, the increase in employment seen in April was negligible and failed to gain meaningful traction," De Lima added.